Good morning. This is the COSCO conference operator. Welcome, and thank you for joining the doValue Preliminary Full Year 2024 Financial Results Conference Call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Mr. Daniele Della Seta, Head of Investor Relations. Please go ahead.
Good morning. I'm Daniele Della Seta, Head of IR at doValue. Today, I'm pleased to be joined by Manuela Franchi, our Group CEO, and Davide Soffietti, our Group CFO. We are very excited to share with you the preliminary results of what has been a truly remarkable and important year for doValue. Following the successful completion of a landmark M&A transaction and a well-received right issue, we are proud to present the outcome of a year full of achievements and progress. Today's agenda will be as follows: Manuela will start by providing an overview of our results, together with insights into the latest market and business trends. After that, Davide will give a detailed review of our financial performance for the periods. At the end of our presentation, we will be happy to answer any questions you may have. Thank you for joining us today.
I will now hand over to Manuela to begin.
Thank you, Daniele. 2024 has been an important year for doValue, marked by strong business growth and strategic progress, including the successful completion of the Garant acquisition and the rights issue. We are proud to report that we achieved around EUR 10 billion from new business, surpassing our annual target of EUR 8 billion. The start of 2025 has been equally positive, with 70% of the annual target already reached in the first two months of the year. This demonstrates our solid market position and the continued trust of clients versus doValue, reinforcing our leadership in the industry and growing market share. Just two months after closing, we are already realizing revenue synergies from the Garant acquisition, driven by the value-added services we are providing to Garant customers.
This highlights the effectiveness of our well-executed integration strategy, which is delivering not only profitability but also the revenue diversification targeted in our business plan. Our EBITDA, excluding non-recurring items, stands at EUR 165 million, fully aligned with our guidance. This includes one month of Garant contribution. However, we successfully achieved our guidance even on a standalone basis, considering the guidance provided by doValue and Garant, both in terms of revenue, EBITDA, and free cash flow for each one. This demonstrates the strength, resilience, and consistency of our core operations. On the cash flow side, we exceeded expectations for leverage, achieving a ratio of 2.4x compared to the anticipated 2.6x on a pro forma basis. This was driven by strong cash flow generation from all areas of the consolidated perimeter, and underscores our solid financial discipline and ability to deliver, as outlined in the business plan.
We also optimized our capital structure by redeeming the 2026 notes and successfully issuing new 2030 notes worth EUR 300 million, strategically positioning us for future growth and financial flexibility. In summary, our strong capital structure, robust cash flow, and the ongoing integration of Garant are driving our solid performance and support our expansion strategy. We are confident that these strategic initiatives will continue to generate value for our shareholders. Moving now to page three, we can see that GBV intake from new business in 2024 exceeded our annual target by 25%, reaching EUR 9.9 billion. The strong performance was mainly driven by excellent results in Greece, where doValue secured over 70% market share on all primary market deals closed in 2024. In Italy, we grew our market share despite strong competition, and we expect to benefit from the ongoing consolidation process, supported by the Garant transaction.
In Spain, despite being a smaller player, we captured over 20% of all MPL deals so far this year. On forward flows, we recorded EUR 4.3 billion, which is more than double the initial target of EUR 2 billion. Regarding secondary mandates, we retained servicing on 100% of the portfolio after secondary market transactions, with a total of EUR 2.8 billion in GBV. This was a strong result, especially considering the competitive landscape and also accelerates fee generation from our existing GBV, thanks to the sales fees and to the advisory revenue. Lastly, as part of our strategy to diversify revenue streams, about 35% of new mandates in 2024 were non-MPL assets, including UTP and other asset classes. This is an important step, as these assets typically offer higher margins, supporting a more profitable revenue mix. Moving to page four, we can see the progress on business intake in 2025.
We have already reached 70% of our annual target in the first two months of the year, thanks to the alphabet mandates in Greece and the tier one outsourcing contract in Italy for a significant portfolio. Looking ahead, we have a solid pipeline of EUR 35 billion projected over the next 18 months, with the most important deals expected in Italy and Spain. In Italy, a particularly important opportunity is linked to the collection of tax receivables, where there could be a new law reforming tax collection activity, today carried out primarily by the state. We believe that as a reputable market leader, doValue is well positioned to capture this opportunity, which will not only diversify our portfolio but also significantly increase GBV. Moving to page five, we focus on synergies and integration, which are a key part of the value creation strategy for the recently completed acquisition of Garant.
As you may appreciate, doValue has extensive experience in managing complex integration processes involving a large number of resources, as demonstrated by our track record, especially in Italy. This experience gives us confidence in our ability to effectively integrate Garant and achieve the planned synergies. The Garant acquisition comes with a clear and tangible synergy plan, fully within doValue control and not dependent on external or uncertain market conditions. This makes the execution highly predictable, with clear and measurable targets over a three-year period, also considering our track record of such integration, specifically in the Italian market. We began implementing the plan immediately after the acquisition, and we have already realized part of the synergies in 2024, just a few weeks after closing. This was made possible by careful advance planning, which allowed us to move quickly and efficiently.
In 2024, we signed contracts for value-added services, increasing projected revenues and optimizing our workforce, avoiding EUR 9 million in redundancy costs by redeploying existing resources. The plan continues in 2025 with the CHARP synergies, IT migration, and legal entity simplification, all of which are already underway. By 2026, we will have achieved consistent HR cost discipline, completed the IT integration, optimized office space, and finalized legal entity simplification. We are well on track with 20% of synergies already executed and an expectation to reach 40% by 2025. Our experience and proactive approach ensure we are fully prepared to capture the full value of the Garant acquisition. Moving now to page six, we review the progress made during the year on the delivery of our business plan assumption we shared in March.
As shown by our results and market developments, our assumptions were reasonably set and conservative in nature and targets tangible. Starting with GDD, we targeted EUR 8 billion new business per year, and we exceeded this target significantly, reaching EUR 10 billion of new business in 2024. We expect to maintain this positive momentum with 2025 post-weight the target as well. In our business plan, we put particular emphasis on what we call the engine to our growth, a set of initiatives designed to increase our growth profile by venturing into adjacent sectors with opportunities and synergies beyond our core business. After almost one year, we have delivered on most of these initiatives. We established a mortgage broker licensed business unit in Greece, which is already generating revenues. Our digital platform for self-service capability in Greece is live and operational, enhancing customer experience and operational efficiency.
Additionally, our alternative asset management project has been accelerated significantly thanks to the Garant acquisition, which brought in an asset management company with EUR 750 million of assets under management, providing a solid foundation for future growth. Our business plan envisions a refinancing of the previous bond maturing by the summer of 2025. We are pleased to report that this target was achieved ahead of schedule. The 2025 bond was refinanced with a term loan in December 2024, and the 2026 bond was refinanced with a new bond issuance in February 2025. The successful capital markets operation was well received by investors, with significant oversubscription of the new notes, reflecting confidence in our strategic direction and financial strength. As for the 2024 targets, we achieved a performance leverage of approximately 2.4x , an improvement compared to our initial forecast of 2.6x .
Our gross book value reached EUR 136 billion as of December 2024. We recorded EUR 479 million in gross revenues, with an EBITDA of EUR 165 million. All financial targets were reached also on a standalone basis. Finally, moving to page seven, before handing the floor to Davide, let's recap on the milestone we achieved. We have made a strong start to 2025 across all strategic areas, positioning ourselves well for continued growth and success. In the Hellenic region, we secured EUR 3.9 billion in new GBV mandates since the beginning of the year. These results underscored the strong market demand and our solid positioning in this region. Italy also delivered robust results, with EUR 1.5 billion in new mandates since the start of the year. In addition, we secured EUR 0.4 billion for master services, reinforcing our leadership in the Italian market.
We also made significant progress on the capital structure side, issuing the EUR 300 million bond with a 7% coupon and 2030 maturity. The bond was oversubscribed by six times, reflecting strong investor confidence in our strategic direction and financial strength. The successful issuance not only strengthened our balance sheet but also provided us with the financial flexibility needed to pursue further growth opportunities. The integration of Garant is progressing smoothly. We are already providing value-added services to Garant clients, leveraging our operational expertise and industrial knowledge. Additionally, we are servicing Garant GDD through doValue FTEs, optimizing our workforce and operational efficiency. This integration is a key milestone in our strategic roadmap and is expected to generate significant synergies and value creation. On the synergies front, we have already realized 20% of the planned synergies as of first Q2025.
Looking ahead, we expect to reach 40% by the end of the year. These efficiencies are driven by our disciplined approach to the integration and our focus on operational excellence. Overall, our strong start to 2025 demonstrates our commitment to delivering sustainable growth and creating value for our stakeholders. We remain focused on executing our strategic initiatives, enhancing our operational capabilities, and driving long-term value creation. With this, let me hand over to Davide to cover the financials in more detail.
Thank you, Manuela, and good morning to everyone. Let's dive into the financials from 2024. Moving to page nine, we have a summary of the full year financials. Overall, we are pleased to report very positive results, reaching the high end of our guidance for both revenues and EBITDA.
It is worth highlighting that Garant contributed for just one month to the group results, and even without this effect, doValue delivered results in line with expectations. Gross revenues in 2024 were EUR 479 million, stable year on year, thanks to strong ancillary revenues that more than compensated for a lower level of sales in Greece and reduced revenues from RIOS in Spain. EBITDA, excluding non-recurring items, was EUR 165 million, at the high end of our guidance, although 7.8% lower than 2023. This decrease is mainly due to fewer disposals and unfavorable comparison-based linkage to the release of provisions for former CEO and BO. Greece continues to be a strong contributor with structurally and sustainably higher margin driven by both group average fees, thanks to the high level of market consolidation and lower than group average cost base.
The EBITDA margin is in line with the guidance we gave during our capital market days. Net income, excluding non-recurring items, was EUR 7 million, which is EUR 5 million higher than 2023, mainly thanks to lower D&A and improvement versus 2023. Moving now to page ten, here is a breakdown of our gross revenues by region. At group level, gross revenues were approximately flat year on year, as lower disposals were largely offset by higher ancillaries, further increasing diversification of revenue. Indeed, non-MPL revenues in 2024 amounted to 35% of gross revenues, on track to reach the 40% to 45% target outlined in the business plan by 2026. In Italy, gross revenues were up by 11.6% year on year.
Gross revenue dynamics were positive even on a standalone basis, driven by positive ancillary revenues and the pickup in MPL collection in Q4, which offset the seasonal weakness in the previous months. In the Hellenic region, gross revenues slightly declined by -3% year on year, mainly due to lower disposal in Greece. Lower MPL GP revenues were partially offset by positive dynamics in value-added services. In Spain, the decline was mainly driven by the RIOS segment due to delays in the debt recovery proceedings in an overall challenging real estate market, leading to a decline in gross revenues by 20%. Moving to page 11, we are pleased to show that we continue to effectively manage our cost base, leveraging ongoing efficiency measures across the group, both in personnel costs as well as IT and SLG expenses. Total operating expenses were EUR 268.2 million in 2024, showing only a minimal increase.
This is remarkable considering the initial consolidation of Garant, a significant EUR 5.9 million one-off effect with the reduced HR costs in 2023, and wage inflation in Italy for the renewal of national collective banking agreement. Despite these challenges, we have maintained strong cost discipline across the group, particularly in Spain, where we achieved a -19% reduction in operating costs, preserving profitability even with subdued revenues. HR costs were up 4.9% versus 2023, mainly due to the Garant consolidation. On a standalone basis, we successfully decreased HR costs in Spain and in Italy, despite the one-off positive element in 2023 impacting the base, a significant wage inflation in Italy in 2024. The Hellenic region was impacted by the expected increase in HR costs due to the onboarding of new portfolios. It was remarkable that HR cost increase in Greece was reflected also at the capital market day back in March.
When it comes to IT, real estate, and SLG expenses, we reported a 3.1% decline year on year, thanks to effective cost discipline practices implemented at group level. Spain has been the most notable driver, with a minus 29% increase in operating costs. In summary, we remain confident in our ability to improve margins thanks to our cost-saving initiatives and the synergies from the Garant integration. Moving to page 12, EBITDA, excluding no recurring items for the group, was EUR 165 million, at the high end of our guidance range. Although this marks a decline of 7.8% versus 2023, it is important to highlight that this was due to the postponement of a certain disposal in Greece and unfavorable comparison based linkage to the aforementioned release of provisions for former CEO and BO.
The EBITDA for the Hellenic region was impacted by higher HR costs and by lower net revenue, driven by lower disposals. Marginality improved in Q4, in line with the seasonality pattern of collection, driving higher revenues. The EBITDA margin in the region was 53.7%, approximately 20 percentage points higher than the group level, driven by the higher base and collection fees in the highly consolidated market and lower workforce costs versus other countries. In Italy, EBITDA remained stable as positive gross revenue dynamics from an acceleration in collection in the fourth quarter, which were previously expected in Q1 2025, were offset by the increased outsourcing and HR costs from Garant. Nevertheless, effective cost discipline measures mitigated the significant wage inflation and the one-off effect from the former CEOs and BOs.
In Spain, EBITDA is once again in positive territory, as continued efforts in cost discipline measures followed to fully offset the decline in RIOS. Moving to page 13, we highlight that EBITDA is translating into a positive reported net income of EUR 1.9 million or EUR 6.7 million net income, excluding non-recurring items. This is a positive outcome, showing our ability to maintain profitability even with the lower EBITDA, excluding non-recurring items. Breaking down the number, we face the higher non-recurring items due to the costs related to the Garant transaction. We had a lower redundancy on poverty-implied equipment, intangible loans, and equity investment in line with the collection costs, also supported by the lower impayment, partially compensated by negative impact from the disposal of doValue Portugal.
Financial interest and commission increases, driven by the new term loan funding the Garant transaction, partially offset by a EUR 2.7 million positive effect from the interest component of the tax claim in Spain. Income tax for the period was positively impacted by favorable comparison-based due to DTA write-offs in 2023 in Italy and Spain. The positive impact on net income by the Spanish tax claim is worth EUR 22.7 million. Finally, minorities were mainly related to doValue Greece. Moving to page 14, let's have a look at the cash flow dynamics. Cash flow from operation in 2024 came in 6% higher than 2023, at EUR 83.7 million. Cash conversion achieved a remarkable increase in 2024, at 54% versus 44% in 2023. This positive result was achieved thanks to a notable reduction in net working capital, thanks to continued control of the invoicing cycle and positive dynamics in advance payment.
CapEx was slightly higher than 2023, in line with investment in the digital platform outlined in our business plan. Lease payments slightly increased versus previous year, while cash out for redundancies was lower than expected, thanks to the deployment of doValue employees to service Garant assets under management. Other change in other assets and liabilities decreased by 55%, EUR 17.7 million lower, in line with the trajectory of normalization we envisaged for the coming years. Cash flow was in line with the previous year, at EUR 28.2 million, implying a significantly higher conversion given the EUR 20 million lower EBITDA in 2024. Stable cash flow was a notable result, especially given the increase in financial charge related to the new term loan and the additional charge linked to the redemption of the 2025 SIC senior security notes in December.
Investment in equity and financial assets remained stable since the nine-month result, EUR 3.4 million, of which EUR 0.4 million referred to the acquisition of Team4 in Spain in 2023. Other EUR 10 million include the cash in linkage to the application in Iberia, offset by the payments for Renault in Spain and the disposal of Portugal. These were partially offset by EUR 2.8 million in flow from financial assets. Finally, the impact related to the Garant transaction amounted to a net outflow of EUR 63.6 million, including the cash consideration paid for the acquisition, the cash inflow from the right issue, and the related transaction costs. On page 15, we show our net debt and leverage position for 2024. At the end of the period, net debt stood at EUR 513 million, up from EUR 494 million recorded at the end of September 2024, before the Garant acquisition.
During the fourth quarter, we successfully raised EUR 446 million term loans and EUR 8 million revolving trade facility as part of the Garant transaction, for which cash consideration paid amounted to EUR 180.6 million, net of the Garant net debt. Additionally, we redeemed the EUR 265.5 million senior security notes due in 2025. We closed the year with a solid cash position of EUR 134 million, up EUR 30 million since September, and enjoyed a liquidity buffer of EUR 264 million, including undrawn revolving trade facility lines. Net leverage at the end of December was at a level of 2.4 x on a proforma basis, with 12 months of Garant EBITDA, better than the 2.6 level we had guided and better than the 3.1 x level as of September 2024, before the Garant acquisition. Leverage was also supported by the acceleration of a collection in Italy previously expected in 2025, which supported EBITDA.
Pay of this topic, on slide 16, we are pleased to present our newly streamlined capital structure following the extension of all our maturities. This is a significant achievement that strengthens our financial position and reduces refinancing risk. As mentioned earlier, in November, we secured a EUR 526 million financing package, including a EUR 446 million term loan and a EUR 80 million revolving trade facility, as part of the Garant transaction. Part of the term loan, which is amortizing and due in 2029, was used in late December to redeem the 2025 security notes, significantly extending the duration of our debt. Additionally, at the beginning of February, we successfully issued a new EUR 300 million bond due in 2030, which was met by very strong demand, achieving over six times oversubscription. We used the proceeds to refinance the 2026 senior security notes, radically eliminating short-term refinancing risk for the next four years.
We remind that doValue continues to have one of the lowest leverage ratios in the industry and was confirmed in the last statisticians its stable corporate rating, double B stable outlook, despite wave of downgrades among peer groups. Turning our attention now to page 17, we give the guidance for doValue in 2025 and confirm our 2026 business plan targets. In 2025, we expect a gross book value between EUR 130 billion and EUR 135 billion, leading to gross revenues in the EUR 600 million-EUR 615 million range and EBITDA in the range of EUR 210 million-EUR 220 million. Synergies from the integration of Garant are expected to contribute in line with expectations. Free cash flow to serve dividend and principal repayment can be expected in the EUR 60 million-EUR 70 million range, as financial leverage should land at two times EBITDA. Thank you all for your attention. We will now take your questions.
Thank you. This is the Colossal Conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. Anyone who has a question may press star and one at this time. The first question is from Tommaso Nieddu of Kepler Cheuvreux.
Hello. Thank you very much for taking my questions. I have two. One is on the numbers. Certainly, they were quite positive, but I'm struggling to understand the dynamics below EBITDA. Maybe you can give us more color on that, and perhaps we can extend that also for the next years, just to understand where we should land in terms of bottom line.
The second question is also on the strong results from Ancillary, which I would say managed to offset the NPL servicing. What kind of growth should we expect from it in the next years, and how much of this can we consider somehow recovering. Just a quick one on M&A. Recently, there have been some rumors on a potential acquisition in Spain. I mean, I do understand it was just speculation, but I would like to know your thoughts on other M&A activities, despite obviously being focused on the leveraging and the integration of Garant. Thank you.
Okay. I will take the first question. Below EBITDA, we have mainly the lastly, EUR 73 million the tar. Net breakdowns on property, plants, equipment, and intangible. This is EUR 73 million. We expect in 2025 a higher number because we are including also the amortization from the Garant acquisition.
For 2024, we just have included one month of amortization for the Garant acquisition that was roughly EUR 2 million. Next year will be higher, including the full impact of Garant. We have the provision for risk and charge. We have included in 2024 is EUR 18 million. We have the interest that I was mentioning before on the EUR 3 million average of the selling of the Portugal branch. We need to consider the financial charge that we have net EUR 29.5 million, and the results of the financial assets are very good, are EUR 3 million. We need to add the tax impact that has been positive impact by EUR 20 million coming from the tax claim in Spain, and we have a tax of roughly EUR 32 million. The net impact is EUR 12 million. You need to consider also the minorities.
That is EUR 12 million that are mainly related to these minorities. Next year, we will have also the Garant minorities.
Regarding your second question on Ancillary, this is pretty much one of the main drivers of our business plan to grow significantly other businesses. We wanted to perform obviously well on our core business, but all the countries made an effort to grow the other products, which are data products, master servicing, legal services, real estate services. This has been particularly important, especially in Italy and in Greece. They will be recurring for certain of them, given that there is a trend in growing this product line. For some others, it depends on the project you make. For example, on the data quality side, we provide services to banks sometimes or to investors to clean up their portfolios, and they are more one-off.
All in all, clearly, we are focusing on growing all the ancillary across the various items we have indicated in the presentation. More on that will be in 2025, given that the advisory division and the mortgage broking division have been set up and are operating. If you remember, the advisory division was set up in April and recorded already in 2024, EUR 2 million of EBITDA. It can only go better from there. The mortgage broking received the approval from the regulatory in October, and it has already secured in the first two months of the year significant leads from the main banks increase. In Italy, we have lots of ancillary, which we used to have in the past and pushed even forward in 2024. Moreover, we signed the contracts to offer these services to Garant clients, which were outsourcing them from the market.
This is realizing part of the revenue synergies in our integration plan. On the last point on M&A, clearly, the market is in consolidation mood, as we have anticipated. Given we are the largest operator in the market, we are often associated to some of these transactions in the market. We look to transactions in the market. Our focus, as we promised to investors, on integration and deleveraging is of paramount importance. I think the results of 2024 are showing already very good direction in that front. As the colleagues have mentioned, only in the first month of the year, we already recorded 20% of the revenues of the synergies from the integration. We have done four of these integrations already in the Italian market. It is one more; we know what to do, basically.
On the leveraging part, I think the fact that we exceeded the expectation is a good sign. We obviously want to do better in 2025. Taking into account that in the proforma 2.4 x leverage, we also include some costs that we paid actually in January related to fees for the transaction. Otherwise, the leverage would have been even lower. Given that the transaction was closing end of last year, we wanted to include them as higher debt, lower cash in the numbers we provided to you.
Thank you.
The next question is from Simonetta Chiriotti of Mediobanca.
Hi, good morning. Thank you for taking my question. I have three. The first is if you can provide a proforma number for 2024, including Garant since the beginning of the year.
Second question, looking at 2025 targets, if you can walk us through the bridge between the EUR 210-220 million EBITDA and the EUR 60-70 million free cash flow. Finally, on Spain, if you could tell us if there has been progression there in your market position and how you see that market in 2025. Also, you have mentioned some advanced payments that had a positive impact in 2024. I mean, do you expect this to have a negative impact in 2025, if I have understood correctly this dynamic? Thank you. Thank you, Simonetta, for your attention. The proforma EBITDA was around EUR 210 million for 2024, with overperformance vis-à-vis the standalone guidance of both Garant and doValue and both on revenues and EBITDA. On the 2025 targets, Davide will drive you through the conversion to free cash flow.
I would move to the other two questions before I leave the space to Davide. Spain has been, we have closed, obviously, last year, the restructuring, the cleanup of the perimeter with the sale of Portugal, which was part of the Iberia perimeter, and also the closing of the business related to real estate development. We have a stabilized and more efficient cost structure. As you have seen, the business has progressed in terms of new intake very well last year compared to the market share. In Spain, we have 6% market share of GBV, but we gained 20% of the mandates in the market. One of the positive points of this business has been the acquisition at the end of 2023 of the little company called Team4, which has helped, one, to internalize the outsourcing costs on the small ticket and secured.
Second, to gain relevant contracts, not only from new banks like BBVA. You remember we had started to work with Sabadell, which has given us, during the course of last year, around EUR 1 billion of assets to manage, starting from the end of 2023, where they were around EUR 300 million. Obviously, with CAIXA as well, where we had started to work the previous year. Team four is also very active in the non-banking receivables. Works with the likes of Amazon, PayPal, and utilities. This is an area of growth that we want to capture through our digital platform. That is what we have launched already in Greece and will be launching in Italy and in Spain in the first half of this year.
This drives us automatic and digital collection, especially in certain segments where traditionally we go with the market goes with the call center type of approach. It opens us to all the non-banking receivable, all the tax receivable business, and the state receivables in general. It is a completely different dimension to our traditional one. This is also why we have pushed on this business. Spain, on that front, has already the platform, so it is able to capture it earlier on. In terms of advanced payments, probably there was a misunderstanding. The advanced payments were in the years before in 2024, so in 2023. In 2024, it was normalized, the progress. We have anticipated the cash in 2023. This positive impact was not in 2024.
Twenty twenty-four was real cash generation that is progressing, obviously, in the first month of this year, with the targets we have given for the full year. Davide, please, if you can explain. Yes. Just starting for the guidance, the view to the market for 2025, assuming to be in the middle of EUR 215 million EBITDA, we need to consider the CapEx, and it will be roughly EUR 30 million because we are including also the integration cost we have already announced for the acquisition of Garant. We need to consider the IFRS 16, that is EUR 17 million-EUR 18 million. We have also redundancy costs, always related mainly to the Garant acquisition, plus certain redundancy we are doing in Greece and Spain after the investment innovation we have done. We are continuing to do it also in 2025. It is roughly EUR 15 million.
On top of this, we need to reduce the operating cash flow from financial charge and tax. The expected be roughly EUR 75 million. We need also to consider the reduction of the payment of the earn-out that was due at the end, which is due now in the fiscal course of 2025, that is EUR 12.5 million. We also expect some positive outcome in terms of working capital dynamics. Thanks to our control of the working capital, it will be EUR 5 million. To this, we should get to the EUR 70 million of free cash flow we have guided the market.
Thank you.
The next question is from Davide Giuliano of EQUITA.
Hi, good morning, and thank you for taking my question. The first one is on the ongoing bank consolidation. Is there any impact from bank consolidation on your flow contracts with Banco BPM and BPER?
Is there a possibility to potentially lose or automatically acquire new NPE flows following the ongoing consolidation? The second one is on tax credits. We saw an acquisition by AMCO in credit collection for the public administration over recent days. Are you interested in this type of business, particularly in servicing tax credits? Do you have any potential expansion in pipeline in this regard in Italy? The third one, sorry, maybe if I missed it, can you please provide us the revenue and EBITDA from Garant that was consolidated in the quarter? Thank you.
Y eah. Davide, thanks for your question. On the bank consolidation, usually how these contracts work, I'm talking in general clearly, but it's pretty much applicable to floor agreements in the sector.
Clearly, the companies which work for banks who are the target tend to have clauses where if the acquirer wants to exit these contracts ahead of time, we have to pay a large indemnity that repays the residual value of the contract, plus usually the people have to go back to the bank. You have a double cost to close this contract ahead of time. Obviously, if you are on the side of the buyer, you have usually the optionality to enlarge your flows if they do not have already a company working with the target to include the flows of the target. In case you are a passive, you are protected from expropriation of the contract. In case you are an acquirer and the target does not have a contract, you have the possibility to expand. All in all, it is positive, it is neutral to positive.
Clearly, in this type of transaction, banks tend to clean up their balance sheet in a combination, so this should produce additional flows. On the second point, you touched a very relevant market trend in the Italian arena, but it is not all in Italy because we are seeing interest to manage externally the tax credits also in other jurisdictions. Clearly, as you have seen also from several articles in the press in the Italian market, the state is looking to see if there is a better, more efficient way to recover a tax credit. The pile of tax credit is huge. It is around EUR 1.2 trillion. Let's say even if a small portion of it, which is something that has been written, EUR 100 billion was served by this industry, it would be a very attractive opportunity. Obviously, we are equipping ourselves to manage this type of credits.
They have acquired a little company that does specialize in it. These are companies which have less than EUR 1 million EBITDA, all of them. We are talking about something marginal. It is more like a license. We have already managed as doValue and Garant in the largest pension credit and tax credit securitization done by the Italian state in the past. A remarkable one was with the IMPS tax credit in 1999. Clearly, we would like to have a role into this process. As you have seen, vis-à-vis AMCO, we have reached a very relevant piece of the outsourcing they have allocated to the market. We are very happy about the collaboration with them. On the revenue and EBITDA, Garant has contributed around EUR 7 million of EBITDA. One second. And around EUR 15-16 million of revenue.
Thank you.
The next question is from Davide Rimini of Intesa Sanpaolo.
Good morning. Thank you for the presentation, and thank you for taking my questions. I have three questions for you. The first is on the guidance that you've given and the usual seasonality that your business seems to have during the year. I would just wonder, you also commented a strong commercial activity, and I just wondered whether you would expect the same seasonality as happened last year. The second question is whether you might provide additional more color on the performance you have collected in Greece, and more specifically on the reference on the lower secondary sales that you have registered, and whether you would expect in 2025 to reverse. The last point, and the last question, sorry, was on slide, I think still on the guidance on slide 17, or actually is 16.
Whether sort of on the dividend distributions, there is no reference on 2025, and given the free cash flow guidance that you provided today, at which point in time of the year you would be probably more inclined to give more light on that front? Thank you.
Thanks for your question. On the seasonality factor, we are at the page in the back, given that we are often asked this question, so we want to give a reminder of the seasonality on page 19. Clearly, the business also of Garant has similar trends. Clearly, we see as a foreclosure that is stronger than the others, as it has already historically happened.
Last year, we had promised in November when we announced the nine months that Q4 would have been a strong quarter, and this is also evident from the numbers from the following page of page 20, probably even stronger than the previous one. The previous year even cleaned of the Garant effect. On the other side, the possibility to anticipate a lot of the new business at the beginning of the year, and this links to your second question about the commercial activity. Last year, we were around November already at EUR 8 billion, and we went to EUR 10 billion at the end of the year. Many of these portfolios were onboarded in the second half of the year. Today, we are already at EUR 5.4 billion at the beginning of the year, and all of them have been onboarded or will be onboarded by the month of March.
You are anticipating this effect. Because of the activity we are seeing in the market, we expect to reach the target of EUR 8 billion already in the first half of this year. Obviously, trying to surpass that target in the second part of the year. We will not wait until October or November. In terms of performance of Greece, secondary sales are not under our control in the sense that it is not a question of if the investor buys or does not buy this portfolio. It is more about the seller, when he wants to sell the portfolios. We are planning at the beginning of the year about the sales we would do, anticipating the behavior of our clients.
Sometimes they want to sell right away, and based also on what the app structure already considers, sometimes they want to sell right away at the beginning of the year, sometimes more at the end. These sales not done this year will be recovered in the first part of 2025 because they are in the pipeline. They just, the seller is activating them a little bit later, and they take the normal time to do the due diligence from the buyers to put the bids on and so forth. About the dividend distribution, if this was the last question, we have indicated 50% to 70% of reported excellent income, which is around this year, around EUR 25 million of dividends, pretty much, based on our estimates. Then with plus and minuses.
Obviously, more the year progresses, like by the third quarter, probably we could have more visibility on confirming the precise amount.
Thank you.
The next question is a follow-up from Simonetta Chiriotti of Mediobanca.
Thank you. On this tax credit opportunity, I would like to understand better this type of market. Do you expect to receive mandates directly from the state or from buyers of these tax credits? The second question is on guaranteed loans, so NPLs coming from that type of loans. This was considered an opportunity. Can you update us on what's happening on that front? Thank you.
Yeah. On the first point, I think the Minister of Economy is assessing if they would like to do a securitization structure where they sell notes to investors and through a master servicing structure where they appoint a master servicer which distributes the mandates, or it is just acceleration of what today is collected by Agenzia delle Entrate, which is a bit delayed in the process of collection, so that is why the state is anticipating it. There are different auditions at Parliament. We had ours just two days ago where we proposed several structures to them, and clearly they will define which is the final structure. The assignment, given that both in the case of a securitization structure or a direct assignment, will always be driven by the state, given that it is a very sensitive area. On the guaranteed loans, this has been quite a topic last year.
We have managed several portfolios with MCC guarantees. We are structuring also a contribution fund for MCC guarantees. Clearly, the amount of the defaults on this asset class has been low. The state has had the urgency to not have the urgency to accelerate recoveries, given that the amount of default has not been very high. Of the amount transacted in the market last year on MPL in the Italian market, half of it overall was with these guarantees. It has been obviously a clear trend in the market.
Thank you.
The next question is from Mario Coppola of Stifel. Hello? Mr. Coppola, your audio is open. Is your telephone on mute?
Hello, can you hear me?
Yes.
Hello? Okay, okay. Sorry, apologies. Good morning, and thank you for taking my question early. I have only one left, actually.
I think you mentioned EUR 75 million of impact on cash flow from financial charges and tax. Does this figure reflect also the impact on the P&L? Yeah, the P&L is slightly higher because it needs also to amortize the cost of the bond and the term loan. This is the full cash outflow. Okay. Thank you.